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Congress Nudges FCC on VOIP

Newly introduced legislation would protect voice-over-IP services from being hit with access charges from entrenched telephone companies and taxes from states and cities.

As new voice-over-IP services emerge on a weekly basis, a tug of war is growing in Congress over how the emerging technology fits into the traditional telecommunications regulation and taxation schemes. Newly introduced legislation would protect the services from being hit with access charges from entrenched telephone companies and taxes from states and cities.

Rep. Chip Pickering, R-Miss., and Sen. John Sununu, R-N.H., introduced similar bills this month aimed at keeping the cost of VOIP services down and the pace of innovation up. Many telecom experts predict that it is only a matter of time before all voice traffic is sent over packet-switched networks rather than the legacy circuit-switched networks built by incumbent phone companies.

For VOIP providers seeking inroads into the telephony market dominated by the Regional Bell Operating Companies, the most important provision of the bills defines VOIP as a software application rather than a telecom service. This definition would exempt VOIP services from the Byzantine system of access payment known as intercarrier compensation.

"This legislation looks to formally differentiate between the application and the network. Were at a milestone with that," said Robert McDowell, senior vice president and assistant general counsel at The CompTel/ Ascent Alliance, a trade group of competitive carriers based in Washington. "The telecom wars have been raging for many, many years. We dont want to saddle this new technology with the same irrational costs that circuit-switch voice is saddled with."

For enterprises in particular, IP-based communications are touted as cheaper and more versatile than traditional voice telephony because voice, data and video are delivered over the same network using the same user equipment. Signal Perfection Ltd., a company that installs video equipment at large arenas, started using VOIP services from Level 3 Communications Inc., in Broomfield, Colo., rather than traditional Centrex services when it moved to new offices.

"Weve definitely found it to be more cost-effective, and saving anything is a good thing," said Dennis Murphy, executive vice president at Signal Perfection, in New York. "If it starts to cost more, then it doesnt make any sense."

The Federal Communications Commission in February initiated a proceeding on IP-based communications, and the new bills would place VOIP squarely under federal jurisdiction, restricting state and local taxes. In addition, it would set deadlines for the FCC to address a host of related issues, including Enhanced 911 service and the ability of law enforcement to tap IP-based phone calls.

State regulators, however, raised concerns about the legislations approach, taking issue with the premise that states are eyeing VOIP for tax revenue. The lawmakers are calling for dialogue instead.

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